“While patent pools may generate some efficiencies and benefits, they
may also cause anticompetitive effects like price fixing, collusion, and
thwarting innovation,” Balto said.

Barriers to Competition on the Innovation Superhighway builds on
a 2011 investigation into the patent licensing group MPEG LA, as well as
various Department of Justice and Federal Trade Commission enforcement
actions and guidelines, to analyze the evolving landscape for
present-day patent pools.

The paper highlights MPEG LA’s MPEG 2 pool, which has received criticism
for levying outdated licensing fees for digital video patents that are
near or past expiration. The MPEG 2 standard can be found in a variety
of consumer technologies that stream video and audio content such as
cameras, smart phones, receivers, DVD players, and televisions.

“Patent pools have served as the information superhighways that led to
the products millions of consumers enjoy every day while fostering
tremendous innovation and creativity. They have also allowed for the
integration of complementary technologies, lowered transaction costs,
and reduced the risks of holdup and royalty stacking. But, because of a
lack of antitrust enforcement some pools are becoming the tollbooth on
the high-tech superhighway, causing consumers to pay more for less
innovation,” said Balto.

As a result of the findings, Balto recommends steps the Department of
Justice, Federal Trade Commission and other antitrust groups should take
to ensure the integrity of patent pools. These recommendations entail
more rigorous follow-up on existing pools to make certain that they
properly fulfill their procompetitive purposes for the benefit of
licensors, licensees and consumers alike.

About David Balto

David Balto has more than 15 years of government antitrust experience as
a trial attorney in the Antitrust Division of the Department of Justice
and in several senior level positions at the Federal Trade Commission.
He was the Policy Director of the Bureau of Competition of the Federal
Trade Commission (1998-2001) and attorney advisor to Chairman Robert
Pitofsky (1995-1997). In these positions, he was a senior advisor in all
aspects of the FTC's merger and non- merger enforcement program. While
at the FTC he helped bring enforcement actions against patent pools and
contributed to the DOJ/FTC Intellectual Property Guidelines. Information
about his practice can be found at www.dcantitrustlaw.com.